Related News

Analysis & Opinion

SAN FRANCISCO (Reuters) - A U.S. judge has rejected efforts by Chevron Corp to secure documents from a California environmental advocacy group in a fraud case related to a $19 billion award for rainforest pollution in Ecuador.

Magistrate Judge Nathanael Cousins on Wednesday quashed Chevron's subpoena for a deposition and documents from Amazon Watch, which the group's own lawyer described as the U.S. oil company's "sharpest critic."

The subpoena was related to a case scheduled to go to trial on October 15 in which Chevron accuses Ecuadorean residents, their lawyers and advisers of fraud in obtaining a multi-billion dollar judgment from a local court.

Cousins said he had to weigh the free speech rights of Amazon Watch under the U.S. Constitution's First Amendment against the possibility of Chevron uncovering evidence for its case.

"I must err on the side of protecting the First Amendment activity," he said in his ruling in San Francisco federal court, although he left open the possibility that Chevron could seek documents under a narrower scope.

The parties are racing to gather evidence ahead of a May 31 deadline for discovery, Chevron lawyer Ethan Dettmer said.

The start of the trial in October will come almost exactly two decades after Ecuadoreans first filed their case in New York against Texaco, which was bought by Chevron in 2001. Texaco spent years pushing for the case to be moved to Ecuador, which eventually happened a decade ago.

Texaco was accused of contaminating the jungle around Lago Agrio, Ecuador, from 1964 to 1992. Chevron says Texaco cleaned up all the waste pits for which it was responsible before turning the sites over to state-owned Petroecuador, which still operates there.

The Ecuadorean court in Lago Agrio issued its judgment against Chevron in February 2011.

Chevron then sued the Ecuadoreans and their long-time legal adviser, Steven Donziger, in Manhattan federal court. Chevron accuses them of illegally pressuring the Ecuadorean court to render a judgment in their favor, making fraud and racketeering conspiracy claims under the U.S. Racketeer Influenced and Corrupt Organizations Act. Donziger and the Ecuadoreans deny they acted improperly.

On Wednesday, Dettmer argued for Chevron that Amazon Watch became part of the fraud by publicizing the Ecuadorean plaintiffs' arguments in an effort to put enough public pressure on Chevron to force the company to settle the case.

But Richard Herz, a lawyer for Amazon Watch, said Chevron had already amassed ample evidence with more than 100 subpoenas, 20 more depositions scheduled, on top of 16 days of deposition from Donziger himself along with his entire computer hard drive.

"They have every scrap of paper that he's ever written," Herz said.

The fraud case is Chevron Corp v. Steven Donziger et al, U.S. District Court for the Southern District of New York, No. 11-0691. The related case over the Amazon Watch subpoena was in the Northern District of California, No. 13-mc-80038-CRB.

(Reporting by Braden Reddall in San Francisco. Editing by Andre Grenon)